The New Zealand dollar against the Aussie dollar is now heading into
territory that could be described as uncharted, having gone through the support
level in the 1.07 region that held it back for a while.
There is every reason to believe that this trend will continue, as pointed out by us here. Prices
never go anywhere in a straight line, and this was demonstrated by the little
matter of breaking through the most recent support, but this movement is strong
and well established. Note also the distance that price is below the 200 period
Simple Moving Average (SMA, blue line), and the strong downward slope of that
indicator.
New Fed voter is in favour of
aggressive tapering
The President of the Federal Reserve Bank of Dallas, Richard Fisher,
becomes a voting member of the Federal Open Market Committee this year. This is
the body that will decide when, whether and to what degree tapering of US
Quantitative Easing will take place. Some remarks made by Mr. Fisher in a
speech yesterday might be worthy of note, in light of these facts.
He said he was glad the Fed had begun to taper, but he would have
preferred a more aggressive start to this, indicating that double the amount of
bond buying reduction would have been more to his liking.
QE, according to Fisher, “had caused a number of asset markets to rise
more than economic fundamentals would indicate”. He said that central bank
policy had put beer goggles on investors, causing them to act irrationally.
Rising stock prices and bond market developments were a concern to him.
'Were a stock market correction to ensue while I have the vote, I would not flinch from supporting continued reductions in the size of our asset purchases,' Mr. Fisher warned. He said 'as long as the real economy is growing, cyclical unemployment is declining and demand-driven deflation remains a small tail risk, I would vote for continued reductions in our asset purchases, with an eye toward eliminating them entirely at the earliest practicable date.' (Additional reporting by Dow Jones News Wire).
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